Final Results
De La Rue PLC
28 May 2003
PRELIMINARY STATEMENT
Year to 29 March 2003
TRADING SUMMARY
• Profit before taxation, exceptional items and goodwill amortisation of
£48.1m*, in line with February 2003 trading statement, but down from £90.6m*
last year.
• Free cash flow of £72.7m** generated (2001/2002 £81.6m). The Group
ended the year with net cash of £8.2m representing a net cash outflow of £41.8m.
• Final dividend maintained at 9.2p bringing full year dividend to
13.6p, an increase of 1.5% on last year (2001/2002 13.4p).
• Currency results down slightly on last year primarily due to the
continuing weakness of the banknote paper market. Strong second half performance
with closing order book slightly ahead of last year. Rationalisation of Security
Products progressing to plan.
• Cash Systems' restructuring programme underway to reduce the cost base
and underpin trading in current market conditions. Annualised cost savings of
£7m are targeted from 300 redundancies at a cost of circa £8m.
• Global Services' new managing director, Peter Cosgrove appointed in
March 2003 and strategic review of divisional business portfolio is now underway
to determine the long-term attractiveness of each of its businesses.
• Total exceptional charge of £49.2m including cash costs of £24.0m (of
which £12.7m is in 2003/2004). Non cash exceptional items of £25.2m includes
£16.0m relating to the impairment of Currency Systems International acquisition
and £1.3m in relation to the Group's investment in Valora.
* before exceptional charges of £49.2m (2001/2002 £13.1m gain) and goodwill
amortisation of £3.6m (2001/2002 £2.8m)
** before dividends from associates, exceptional cash flows, capital
expenditure, acquisitions, dividends and share buy back costs
Sir Brandon Gough, Chairman of De La Rue plc, commented on the results:
'The poor performance of the Group this year has been a considerable
disappointment. In the current difficult trading conditions the Board believes
that the short-term emphasis in Cash Systems and Global Services should be on
the restoration of profitability. This is being targeted through the
implementation of the cost reduction programmes and more aggressive integration
of recent acquisitions. This, together with the completion of a strategic review
of Global Services' and Security Products operations, will be the focus for the
current year.
Against this background the Board expects underlying market conditions to remain
at current levels throughout 2003/2004. In addition, De La Rue's results for the
coming year will also be adversely affected by an anticipated increase in
pension charges and unfavourable foreign exchange movements relating to
manufacturing costs in Cash Systems. Despite this, underlying performance is
expected to show some improvement in 2003/2004 as the benefits of the cost
reduction programmes are delivered.'
For further information please contact:
Stephen King Group Finance Director +44 (0)1256 605307
Mark Fearon Head of Corporate Affairs +44 (0)1256 605303
Jonathan Glass /Mike Smith Brunswick +44 (0)20 7404 5959
28 May 2003
Group Results
Our results for the year to 29 March 2003 are a considerable disappointment,
particularly in the light of our expectations at the beginning of the year. As
2002/2003 progressed, the extent to which a number of De La Rue's key markets
had been affected by worsening economic conditions became progressively more
apparent. In addition, market uncertainty introduced by the increased threat to
global security during the latter part of the year further reduced already
fragile confidence.
The Group's sales for 2002/2003 were £582.7m, £68.5m behind last year. Profit
before tax, exceptional items and goodwill amortisation was also lower at
£48.1m*, down from £90.6m* last year. As a result, headline earnings per share
(excluding exceptional items) fell from 34.4p to 18.9p.
In the Security Paper and Print division operating profits were down by £10.7m
to £30.4m (before reorganisation costs of £18.6m, goodwill amortisation of £0.2m
credit and £1.3m investment impairment). An expected weakening in the banknote
paper market, together with a disappointing performance from the non-banknote
Security Products business, impacted the full year result. Despite this, the
underlying banknote business performed strongly and proved its resilience with
another creditable performance. In response to poor trading conditions in
Security Products we announced our plans to rationalise its manufacturing
operations. This programme, which involved closing our High Wycombe facility in
the UK with the loss of about 350 jobs, has progressed in line with our
expectations and as at 29 March 2003, 225 employees had left the business. We
are on track to complete the closure of the site by the end of June 2003, and to
have completed all associated work by September 2003.
The Group's financial performance was impacted by difficult trading conditions
in the Cash Systems division where operating profits were sharply lower, down
£24.4m to £11.6m (before reorganisation costs of £10.5m and goodwill
amortisation of £19.3m). Sales throughout Europe were poor, but particularly so
in Germany and Spain where sharply worsening economic conditions further
disrupted financial institutions' ordering patterns following the exceptional
euro changeover business of 2001/2002. It is estimated that the euro changeover
provided a benefit to the division in 2001/2002 of 8% of sales. Sales in the US
markets, however, were strong and increased 20% on 2001/2002 levels. The
Currency Systems business similarly experienced difficult trading conditions
with sales of large sorters impacted by both adverse economic conditions in the
eurozone and increased worldwide political uncertainty, particularly during the
final quarter of the year.
The Global Services division continued to face difficult trading conditions and,
in particular, was impacted by customer postponements of Identity Systems'
projects and reduced banknote volumes in Holographics and a first year loss in
Sequoia, our voting systems business acquired in May 2002. As a result the
division made an operating loss of £4.0m (before reorganisation costs of £2.8m
and goodwill amortisation of £0.5m). In March 2003, we appointed a new managing
director of the division, Peter Cosgrove, who is undertaking a strategic review
of the Global Services businesses together with the non-banknote security paper
and print activities for which he has responsibility, with a view to determining
the long term attractiveness of each of these businesses.
* before exceptional charges of £49.2m (2001/02 - £13.1m gain) and goodwill
amortisation of £3.6m (2001/02 - £2.8m)
Despite poor trading conditions, cashflow was a key strength of the Group during
the year, with free cashflow of £72.7m* generated (2001/2002 £81.6m*) . The
Group ended the year with net cash on the balance sheet of £8.2m representing a
net cash outflow of £41.8m. The performance was aided by a very strong reduction
in working capital in the final quarter of the year.
Dividend
Subject to shareholders' approval, the Board is recommending the maintenance of
the final dividend at 9.2p per share, bringing the full year dividend to 13.6p
per share, up 1.5% on last year. The final dividend will be paid on 8 August
2003 to shareholders on the register on 11 July 2003. As previously outlined,
the timing of the interim dividend was brought forward from April to January in
2002/2003 to spread payments more equally over the year. As a result the Company
made three dividend payments in the year ended 29 March 2003.
Restructuring Actions
In response to the difficult trading conditions this year and, in particular,
the reduced profitability of the Cash Systems and Global Services divisions, we
have announced several major programmes to improve cost effectiveness and
efficiency of De La Rue's operations. By the end of 2003/2004, these programmes
are targeted to achieve annualised savings of £18m.
Share Buy Back
As previously outlined, the Board has decided to use, where appropriate, the
existing authorities granted to it to acquire shares for cancellation. During
the year, the Company acquired and cancelled 13.9 million shares (7.1%) under
this programme and returned £38m to shareholders. The Board intends to seek
shareholder's approval at the AGM on 17 July 2003 to renew its existing
authority to repurchase shares to the upper limit of 14.99%. The Board will
continue to monitor the amount and timing of purchases in relation to market
conditions and the Group's overall financial situation.
Group Strategy
In the current difficult trading conditions the Board believes that the
immediate emphasis in both Cash Systems and Global Services is on the
restoration of profitability. This is being targeted through delivering the cost
reduction programmes and more aggressively integrating recent acquisitions. In
particular the acquisition of Currency Systems International, acquired in May
2001, has taken longer and been more difficult than expected. This, together
with the completion of a review of Global Services' and Security Products
operations, will be the focus for the current year.
The Group's longer-term strategy is to apply our knowledge and technologies in
secure products, transactions and solutions to create sustainable value for the
long term. We remain confident as to the strength of the currency printing and
paper business and in our ability to develop increased value in the Cash Systems
division both as market sophistication increases, and through an expansion of
its geographical reach and product range. The acquisition of Papelaco (self
service banking automation) in May 2002 made a positive contribution in the full
year and has enabled Cash Systems to occupy a unique position as the only cash
handling business worldwide to operate across the whole of the cash handling
market place. This broad spectrum of solutions will enable De La Rue to advise
its customers on the most effective cash handling solutions according to their
requirements.
* before dividends from associates, exceptional cash flows, capital expenditure,
acquisitions, dividends and share buy back costs
Acquisitions
During the year Group expenditure on acquisitions was £33.4m. The two most
significant were:
In May 2002, Global Services acquired 85 per cent of Sequoia Voting Systems Inc.
from Jefferson Smurfit Group plc. Sequoia is one of the largest providers of
voting equipment and software, ballot printing and election services in the USA.
The cash consideration was US$23m (£15.2m) with a future payment of up to US$12m
(£8.0m) dependent on certain performance criteria, linked to sales growth, being
met.
In June 2002, Cash Systems completed the acquisition of the banking automation
business of Papelaco for €20.5m (£14.2m) having received the necessary
regulatory approval from the Portuguese competition authorities. A future
payment of up to €10.5m (£5.8m) is payable dependent on certain performance
criteria, linked to sales and margin growth, being met.
Associates
Profit from associates before interest and tax fell from £11.8m to £9.2m. The
main associated company is Camelot, the UK lottery operator. Our share of
Camelot's profit was expected to fall following the start of the second lottery
licence in January 2002, and the decrease in
De La Rue's effective shareholding from 26.67 per cent to 20 per cent. In
addition, the new lottery licence has reduced shareholders' contribution from
each 100p collected from around 1.0p to just under 0.5p. De La Rue's share of
operating profits (before exceptional items) from Camelot was lower than last
year at £8.6m (2001/2002 £11.7m).
Dividends received from associates of £9.0m were significantly lower than last
year's income of £28.3m as last year Camelot paid out the remainder of retained
profits which arose over the first licence period.
Interest Charge
The Group's net interest income was £0.9m (including interest received by
associates of £0.4m). Excluding interest received by associates, the Group net
interest credit of £0.5m was a £0.9m improvement on the previous year.
Taxation
Excluding exceptional items, the underlying effective tax rate was 28.0 % (2001/
2002 27.6%). The effective tax rate of 28.0% is currently lower than the
standard UK corporate tax rate of 30.0% but in future years is expected to rise
as fewer of our Group activities are based in lower rate tax regimes.
Tax payments at £3.7m were £7.5m down on 2001/2002, reflecting a combination of
lower UK taxable profits and some prior period tax recoveries.
FRS17 - Pension Charge
The Company previously announced its intention to adopt FRS 17 for the current
year. The Accounting Standards Board has announced subsequently that full
implementation of the standard has been deferred in order for a consensus on
pensions accounting to be reached with the International Accounting Standards
Board. The Company consequently decided in September 2002 to defer full
implementation, but will continue to comply with the transitional arrangements.
The net charge to P&L under FRS 17 for the UK pension scheme would have been
£2.4m in the full year compared to the actual charge on a SSAP 24 basis of
£1.9m.
The Company is presently amortising the pension scheme surplus identified at the
last triennial actuarial valuation in April 2000. The impact of this
amortisation in 2002/2003 was a credit to the profit and loss account of £6.1m.
The next triennial valuation, which will be available later this year, is
unlikely to show a surplus, and the amortisation credit will not, therefore,
benefit the 2003/2004 results. In addition, it is likely that the underlying
regular pension cost will also increase as a result of the current depressed
levels in the world equity markets.
Exceptional Items
The net after tax exceptional loss was £39.2m (2002 gain of £15.1m). Exceptional
pre-tax costs of £49.2m were charged to operating profits comprising cash costs
of £24.0m (of which £12.7m is in 2003/2004) relating to previously announced
restructuring activities and non-cash costs of £25.2m. A summary of the main
cash costs and non cash charges are tabulated below:
Cash Non Cash Total
£m £m £m
Reorganisation Security Products (inc. (12.7) (5.9) (18.6)
---------------- Global Services)
Cash Systems (8.5) (2.0) (10.5)
Sequoia (2.8) - (2.8)
--------- --------- ---------
(24.0) (7.9) (31.9)
CSI Goodwill write-off - (16.0) (16.0)
------------------------
Loss on impairment of investment in JV - (1.3) (1.3)
----------------------------------------
_________ _________ _________
Exceptional pre-tax costs (24.0) (25.2) (49.2)
--------------------------- -------- -------- --------
Non cash charges predominantly relate to the Board's view of the carrying value
of goodwill in relation to the Currency Systems International acquisition
(acquired in May 2001 for £27.0m) and has determined it to be impaired as a
result of trading experienced since acquisition. An exceptional write down of
£16.0m has been made at the year end, leaving a remaining carrying value of
£8.2m which will now be written off over a reduced estimated life of ten years
(eight years remaining). The Group's £1.3m investment in Valora (a 25%
associate) has been impaired reflecting uncertainty over future cashflows.
Cash flow and Borrowings
Cash flow performance was again excellent. During the year the Group spent
£33.4m on acquisitions, £38.0m on the share buy back programme, and accelerated
the payment of our interim dividend for the current year which amounted to
£7.9m. Despite this, De La Rue still closed the year with net cash of £8.2m.
Board and Management Changes
In September 2002, we were pleased to announce the appointment of Stephen King
as Group Finance Director. He was appointed as an executive director of the
Board with effect from 31 January 2003 joining De La Rue from Aquila Networks
plc, formerly Midlands Electricity plc, where he was Group Finance Director
since 1997. Prior to that he was Group Financial Controller of SEEBOARD plc and
Group Chief Accountant at Lucas Industries plc. Stephen, 42, has a broad range
of financial and commercial expertise and we look forward to his contribution to
the Board.
As previously announced, Pietro Armanini retired as managing director of Cash
Systems on 31 March 2003 and was succeeded by Germain Roesch, 44, the previous
managing director of Cash Systems' Financial Institutions (FI) business. Germain
is an accomplished team-builder with a strong international outlook and has an
excellent understanding of Cash Systems' markets. The Board would like to take
this opportunity to thank Pietro for his significant contribution to the
division in his four years as managing director.
In March 2003, Peter Cosgrove was appointed as managing director of Global
Services, following the resignation of Jon Marx. Peter, 39, joined De La Rue
from Jefferson Smurfit Group plc, one of the largest European-based
manufacturers of paper based packaging products. He held a number of key
management roles including personal assistant to the Chairman of Jefferson
Smurfit Group. Since 1998, Peter was President of Smurfit Packaging Corporation
a group of several Smurfit owned, US based, subsidiaries with sales of $220m and
550 employees.
Extracts from the Operational Reviews
SECURITY PAPER AND PRINT 2003 2002 change
£m £m £m
---------- ---------
Sales
Continuing operations 211.0 226.8
Acquisitions 2.8 -
---------- ---------
213.8 226.8 (13.0)
Operating profit*
Continuing operations 30.5 41.1
Acquisitions (0.1) -
---------- ---------
30.4 41.1 (10.7)
* before exceptional items of £19.9m (2001/2002 £7.3m) and goodwill amortisation
credit of £0.2m (2001/2002 Nil)
Currency
As expected, operating profits in the Currency business were lower than last
year. This reflected the one-off benefit of the euro work in 2001/2002 combined
with an unusually large number of new designs in the banknote order book in the
first half of 2002/2003, which took longer to prepare than normal repeat orders.
This situation began to unwind in the second half and Currency finished the year
strongly, backed by a solid banknote order book offsetting the continued
weakness of the banknote paper market. Once again, cash generation has been a
key strength of the business with operating cashflow ahead of operating profits
for the second year running.
Banknotes
The banknote printing business performed strongly after the slow start to the
year and we have again concentrated on achieving a better quality mix of
business at higher margins. With increasing proliferation of colour copying,
scanning and printing technologies we continue to develop anti-counterfeit
solutions such as wide threads and holographic devices for our customers to
counter these threats.
We have also continued to focus on a rigorous approach to managing our cost
base. The closure of our Singapore banknote printing factory, announced in March
2002, was completed in the second half as expected, resulting in the loss of 290
jobs. The consequent reorganisation of our remaining worldwide printing
operations now means that we are producing the same volume of banknotes that was
previously produced by five plants from our remaining four sites. The financial
benefits of the move, the majority of which will come through in the 2003/2004
financial year, are estimated to have achieved an annualised benefit of £3m.
At the beginning of the current year we completed the acquisition of the Bank of
England's banknote printing operations based at Debden, Essex for a cash
consideration, including acquisition expenses, of £10m. This followed a decision
by the Bank in December 2002 to contract out its banknote printing operations.
At the same time, De La Rue also signed a supply contract with the Bank to cover
its requirement for banknotes for a period of seven years. We expect the
transaction to be earnings enhancing over the seven year term of the contract.
The primary role of Debden will be to continue to supply the Bank of England
with its requirements for banknotes, which last year amounted to about one
billion banknotes. As a result the business will continue to specialise in
producing long run work, although opportunities may exist for Debden to produce
some export work. We will also continue to operate the Gateshead banknote
printing factory in the UK as a separate facility, focused, as now, on
specialist short-run export work.
Papermaking
As previously announced, we expected the banknote papermaking market to return
to historical ordering patterns and volumes. Consequently, we expected a much
stronger year for the papermaking operations. However, the papermaking market
remained weak during 2002/2003. The timing of the expected return to historical
volumes remains difficult to predict. In March 2003, it was particularly
pleasing for our papermaking facility at Overton in the UK, De La Rue's largest
manufacturing facility, to achieve ISO 14001 environmental accreditation. This
underlines the considerable progress we have made in improving our environmental
management at the site.
Security Products
Trading in the Security Products business continues to be weak, and in May 2002
following disappointing results in 2001/2002, we initiated a manufacturing
review of the business with a view to delivering considerable operational
improvements as well as improving the focus and competitiveness of the business
going forward. In particular, the review identified surplus capacity and also
significant duplication of manufacturing capabilities and technologies across
its production facilities worldwide.
In response, in September 2002 we announced a reorganisation of the
manufacturing base to create specialist production facilities worldwide. This
involved grouping future production around our main product classes and their
respective specialist production processes. To address the overcapacity problem
we announced our intention to close our production facility in High Wycombe in
the UK, with the loss of about 350 jobs. In November 2002, we reached agreement
with union and employee groups over the closure of the site.
The reorganisation plan, including the closure of High Wycombe, is proceeding to
plan and on track for completion in June 2003. The costs of these actions
resulted in an exceptional charge taken in the year of £18.6m, £12.7m of which
will be cash. We also announced in September 2002, that a combination of the
reduced manufacturing capacity and associated reductions in overheads in the
division should result in ongoing annual savings of approximately £5m. Since
September, we have identified further overhead savings in Security Products and
Global Services of £2m. Most of the £7m total savings will come through in the
2003/2004 financial year.
In September 2002, we announced the acquisition of the entire share capital of
House of Questa Ltd, a UK based high security gravure printer for a total
consideration including expenses of £2.9m. House of Questa employs 75 people and
has a single site gravure printing facility based in Byfleet, UK, manufacturing
postage stamps, fiscal stamps and motor vehicle tax discs. We acquired the
business to consolidate our existing gravure printing operations previously
based at High Wycombe to a single purpose facility. The reorganisation plan is
now largely complete with the transfer of capital equipment from High Wycombe to
Byfleet completed in the second half.
CASH SYSTEMS 2003 2002 change
£m £m £m
---------- ---------
Sales
Continuing operations 292.8 370.5
Acquisitions 18.1
---------- ---------
310.9 370.5 (59.6)
Operating profit*
Continuing operations 8.4 36.0
Acquisitions 3.2
---------- ---------
11.6 36.0 (24.4)
* before exceptional items of £10.5m (2001/2002 £3.8m) and goodwill amortisation
of £19.3m (2001/2002 £2.2m)
Cash Systems' sales from continuing operations were down 21% to £292.8m and
operating profits before re-organisation costs of £10.5m and goodwill
amortisation of £19.3m were down £27.6m to £8.4m (before acquisitions), impacted
both by disruption to customer re-ordering cycles in the eurozone following the
euro changeover and generally worsening economic conditions, particularly in
Germany and Spain. Operating margins have also suffered as a result, but cash
generation has continued to be a key strength of the business despite the poor
result.
During February and March Germain Roesch led an organisational review of the
division in response to the poor performance of Cash Systems last year. As
indicated in February 2003, we are taking action to reduce the division's cost
base and expect about 300 redundancies at a number of key sites, mainly across
Europe. The programme is now well underway and we anticipate that, subject to
consultation with employee representatives, this exercise will be substantially
completed by the end of the third quarter of 2003/2004.
The majority of the costs associated with these actions have been included in
the exceptional charge taken in the 2002/2003 financial year of £10.5m, although
some further charges will arise in 2003/2004. We expect that the benefits of
these actions will be felt in the second half of 2003/2004 and will result in
annualised cost savings of approximately £7m. The Board believes that in taking
this action Cash Systems will be better placed to benefit from improving
economic conditions whenever they arise, while in the short term underpinning
trading in current market conditions.
Results in the current year are expected to be impacted by the substantial
weakening of the US Dollar against the Swedish Krona, a region in which the
division incurs significant manufacturing costs. During 2002/2003 this effect
was largely mitigated by short-term foreign exchange currency hedging
arrangements.
Financial Institutions (FI)
In January 2003, Christof Domeisen was appointed to succeed Germain Roesch as
managing director of the FI business. Christof was previously with Cap Gemini
Ernst & Young, Central Europe, where he led their business in the Financial
Services Industry sector in Europe, as well as being chief executive of the
operation in Switzerland.
Poor economic conditions in the eurozone markets of the FI business during 2002/
2003 had the following effects:
* Financial institutions held back on re-ordering following the euro
changeover in 2002. Poor economic conditions in many eurozone economies
exacerbated this situation, which particularly impacted first half revenues.
* Despite the expected return to normal ordering patterns by financial
institutions in some parts of the eurozone in the second half, there was a
sharp deterioration in the trading environments in Germany and Spain at the
start of the 2003 calendar year. In these markets customers delayed placing
orders as well as acceptance of the delivery of orders as they looked to
control costs within reduced budgets.
* Cost containment measures by financial institutions also delayed the
expected evolution of certain key European markets from Teller Cash
Dispensers to Teller Cash Recyclers.
The poor performance of FI in the eurozone was, however, partly offset by strong
performances elsewhere. Revenues in the USA were up 20 per cent, with sales of
Teller Cash Dispensers particularly strong.
In June 2002, Cash Systems completed the acquisition of the banking automation
business of Papelaco, a leading manufacturer of self-service banking technology,
based principally in Portugal and Spain. During the year, sales were in line
with our expectations and the business made a positive contribution to operating
profit.
Currency Systems
Currency Systems' performance was a considerable disappointment during 2002/2003
and we are taking action to bring the cost base into line with current market
conditions. During the year the business suffered as a result of political and
economic uncertainty in several key markets. In particular the impact of 11
September and the uncertainty introduced by the threat of an Iraq war, caused
additional delays in both expected customer orders and in customer acceptance of
the delivery of fulfilled orders. Despite the tough market conditions, sales of
the 6000 banknote sorter have been encouraging with several new installations
completed this year.
During the year, we continued with the integration of the Currency Systems
International (CSI) business, acquired in May 2001. During the second half, the
poor performance of the business was exacerbated by a failure to control costs
of manufacturing during the ongoing transfer of production from the UK to the
USA and Russia, which eroded margins. This issue has now been resolved. However,
the markets for CSI's products are likely to remain significantly worse than
anticipated at the time of acquisition.
Retail Payment Solutions
In its first full year of trading the Retail Payment Solutions business
performed in line with our expectations and we are continuing to develop our
approach to the market. Our initial focus has been on developing solutions for
the UK and USA markets and we are currently running trials with several large
retail customers. This is a necessarily slow process for a start-up business,
but is progressing well and, once fully developed, the opportunity will be to
roll out the solutions to a wider geographic market.
OEM
The Original Equipment Manufacture (OEM) business, which makes dispensing
mechanisms for automated teller machines (ATMs), had a good year with
performance in line with our expectations. Our joint venture with Itautec Philco
had a strong first year of trading. Under the technology agreement De La Rue
licenses technology to allow Itautec to manufacture
De La Rue's NMD 100 cash dispenser platform in Brazil.
Customer Service
Despite a difficult year, elsewhere in the division Customer Service activities
performed strongly with good underlying sales growth. We continue to see an
increasing number of opportunities to expand our service operations further
through bolt on acquisitions and geographical expansion. During the year we
acquired two small service based businesses to support this strategy namely
Serbatech Inc. of Canada and Corpo BHX De Mexico S.A. De C.V. of Mexico.
GLOBAL SERVICES 2003 2002 change
£m £m £m
---------- ---------
Sales
Continuing operations 34.7 48.1
Acquisitions 25.2 -
---------- ---------
59.9 48.1 11.8
Operating (loss)/profit*
Continuing operations (1.4) 0.5
Acquisitions (2.6) -
---------- ---------
(4.0) 0.5 (4.5)
* before exceptional items of £2.8m (2001/2002 Nil) and goodwill amortisation of
£0.5m (2001/2002 £0.6m)
Global Services' revenues from continuing operations declined to £34.7m (2001/
2002: £48.1m) and the division made an operating loss of £1.4m (2001/2002 £0.5m
profit) before exceptional items of £2.8m, goodwill amortisation of £0.5m and
acquisitions.
In particular, timing delays on expected projects within the Identity Systems
business have impacted revenues this year. However, good production volumes at
our installed base of contracts including Chile, Mexico and New York have partly
compensated for the lack of new system sales. De La Rue Holographics' banknote
sector revenues were impacted in the first half by the knock on effect from
production delays caused by new designs in the Currency business' banknote order
book.
The recent poor performance of several operations has highlighted the need to
review the long-term attractiveness of each activity. This review has started.
In May 2002, we announced the acquisition of 85 per cent of the share capital of
Sequoia Voting Systems Inc. one of the largest providers of voting equipment,
software, ballot printing and election services in the USA. Sequoia offers
hardware products in all major segments of the North American elections market,
including direct recording equipment and optical scan systems. In October, as
expected, the Help America Vote Act 2002 was signed by President Bush, releasing
over US$3.9bn of Federal funding (plus matching State funding) for the upgrading
of election systems over the next four years. We believe that this will now
accelerate the evolution of the market to adopting highly secure automated
election systems.
In its first year, Sequoia performed in line with our expectations at the time
of acquisition although it is currently experiencing intense margin competition
in the US elections market. Despite this, there is currently a high level of
enquiry for new election systems and the business has several quotations under
consideration. As indicated in September 2002 it was not possible to convert
these enquiries to shipments in the final quarter of the 2002/2003 financial
year and consequently the business made a loss of £2.6m excluding exceptional
charges of £2.6m. However, Sequoia has recently been successful with systems
sales to two US counties since the start of the new financial year, although at
lower than expected margins.
In March 2003, we announced our intention to outsource Sequoia's ballot printing
operations to a third party and the closure of our Exeter, USA production
facility with the loss of about 60 jobs. This action was in line with our
intentions at the time of acquisition. As the market increasingly moves to
electronic voting systems, we believe it is more cost effective to outsource the
production of paper ballots than to continue to sustain the high costs of
production ourselves in a declining market. The costs of this action will result
in an exceptional charge of £2.8m and is expected to be completed by the end of
May 2003.
Outlook
Our expectations for 2003/2004 are unchanged and we expect underlying market
conditions to remain at current levels throughout the year. In addition, 2003/
2004 will be adversely affected by the anticipated increase in pension charges
and unfavourable foreign exchange movements relating to manufacturing costs in
Sweden. Despite this, underlying performance is expected to show some
improvement in 2003/2004 as the benefits of the cost reduction programmes are
delivered.
We continue to cut costs in our Cash Systems and Global Services division to
underpin trading in the current market conditions. Currency's performance is
expected to be broadly stable despite the adverse impact of the pension charge.
The banknote paper business is expected to return to production levels closer to
capacity, offset partly by reduced banknote volumes as anticipated overspill
orders return to long-term average levels.
-ends-
Notes to Editors
1. High resolution images can be downloaded from NewsCast at
www.newscast.co.uk
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 29 MARCH 2003
Notes 2003 2003 2003 2002 2002 2002
£m £m £m £m £m £m
Before Exceptional Before Exceptional
Exceptionals Items Total Exceptionals Items Total
Turnover
Continuing 536.6 536.6 641.7 641.7
operations
Acquisitions 46.1 46.1 -
582.7 582.7 641.7 641.7
Discontinued - - 9.5 9.5
operations
----------------- -------- ------- ------- -------- -------- --------
1 582.7 582.7 651.2 651.2
----------------- -------- ------- ------- -------- -------- --------
Operating profit
Continuing 37.5 37.5 77.6 77.6
operations
Reorganisation costs (28.9) (28.9) (7.3) (7.3)
Loss on impairment of (1.3) (1.3)
investments
----------------- -------- ------- ------- -------- -------- --------
37.5 (30.2) 7.3 77.6 (7.3) 70.3
Acquisitions 0.5 0.5 -
Reorganisation costs (3.0) (3.0) (3.8) (3.8)
----------------- -------- ------- ------- -------- -------- --------
0.5 (3.0) (2.5) - (3.8) (3.8)
----------------- -------- ------- ------- -------- -------- --------
38.0 (33.2) 4.8 77.6 (11.1) 66.5
Discontinued - - - (1.4) - (1.4)
operations
----------------- -------- ------- ------- -------- -------- --------
Operating profit/ 38.0 (33.2) 4.8 76.2 (11.1) 65.1
(loss) before goodwill
amortisation
Goodwill (3.6) (16.0) (19.6) (2.8) (2.8)
amortisation
----------------- -------- ------- ------- -------- -------- --------
2 Group operating profit 34.4 (49.2) (14.8) 73.4 (11.1) 62.3
/(loss)
Share of operating 9.2 9.2 11.8 11.8
profits of associated
companies
----------------- -------- ------- ------- -------- -------- --------
Total operating profit 43.6 (49.2) (5.6) 85.2 (11.1) 74.1
/(loss)
Profit on the disposal - - 1.5 1.5
of discontinued
operations
Profit on sale of - - 22.7 22.7
investments
----------------- -------- ------- ------- -------- -------- --------
Non-operating items - - - 24.2 24.2
----------------- -------- ------- ------- -------- -------- --------
Profit/(loss) on 43.6 (49.2) (5.6) 85.2 13.1 98.3
ordinary activities
before interest
Net interest:
Group 0.5 0.5 (0.4) (0.4)
Associates 0.4 0.4 3.0 3.0
------------------- -------- ------- ------- -------- -------- --------
0.9 0.9 2.6 2.6
----------------- -------- ------- ------- -------- -------- --------
Profit/(loss) on 44.5 (49.2) (4.7) 87.8 13.1 100.9
ordinary activities
before taxation
3 Tax on profit/(loss) (12.5) 10.0 (2.5) (24.2) 2.0 (22.2)
on ordinary
activities
----------------- -------- ------- ------- -------- -------- --------
Profit/(loss) on 32.0 (39.2) (7.2) 63.6 15.1 78.7
ordinary activities
after taxation
Equity minority (1.0) 0.3 (0.7) (1.5) (1.5)
interests
----------------- -------- ------- ------- -------- -------- --------
Profit/(loss) for the 31.0 (38.9) (7.9) 62.1 15.1 77.2
financial year
Dividends (24.6) (24.6) (25.5) (25.5)
----------------- -------- ------- ------- -------- -------- --------
Transferred to/(from) 6.4 (38.9) (32.5) 36.6 15.1 51.7
reserves
----------------- -------- ------- ------- -------- -------- --------
4 Earnings per ordinary 16.9p (21.2)p (4.3)p 32.7p 8.0p 40.7p
share
4 Diluted earnings per 16.8p (21.1)p (4.3)p 32.2p 7.8p 40.0p
ordinary share
4 Headline earnings per 18.9p (11.9)p 7.0p 34.4p (5.0)p 29.4p
ordinary share
Dividends per ordinary 13.6p 13.6p 13.4p 13.4p
share
----------------- -------- ------- ------- -------- -------- --------
A reconciliation between earnings per share, as calculated according to
Financial Reporting Standard No. 14 'Earnings per Share' (FRS 14) issued by the
Accounting Standards Board, and headline earnings per share, as calculated
according to the definition of headline earnings in Statement of Investment
Practice No. 1 'The Definition of Headline Earnings' issued by the Institute of
Investment Management and Research, is shown in note 7 of the Notes to the
Accounts.
GROUP BALANCE SHEET
AT 29 MARCH 2003
2003 2002
£m £m
Fixed assets
Intangible assets 54.6 45.7
Tangible assets 163.4 167.7
Investments: Associates 13.5 17.6
Other investments 0.2 2.4
Own shares 19.1 19.8
----------------------------- ------- --------
250.8 253.2
----------------------------- ------- --------
Current assets
Stocks 99.2 97.3
Debtors 119.1 138.6
Deferred taxation 37.2 30.5
Cash at bank and in hand 51.4 87.2
----------------------------- ------- --------
306.9 353.6
Creditors: amounts falling due within one year
Short term borrowings (0.5) (12.4)
Other creditors (208.3) (203.4)
----------------------------- ------- --------
Net current assets 98.1 137.8
----------------------------- ------- --------
Total assets less current liabilities 348.9 391.0
Creditors: amounts falling due after more than one year
Long term borrowings (42.7) (24.8)
Other creditors (4.9) (2.7)
Provisions for liabilities and charges (53.2) (47.6)
----------------------------- ------- --------
248.1 315.9
----------------------------- ------- --------
Capital and reserves
Called up share capital 45.4 48.8
Share premium 12.5 11.5
Revaluation reserve 1.8 1.8
Capital redemption reserve 3.5 -
Other reserve (83.8) (83.8)
Profit and loss account 264.5 334.5
----------------------------- ------- --------
Shareholders' funds 243.9 312.8
Equity minority interests 4.2 3.1
----------------------------- ------- --------
248.1 315.9
---------------------------- ------- --------
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 29 MARCH 2003
Notes 2003 2002
£m £m
-------------------------------------- -------- -------
5a Net cash inflow from operating activities 59.1 88.3
Dividends received from associated companies 9.0 28.3
5b Returns on investments and servicing of finance (1.1) (1.0)
Taxation (3.7) (11.2)
5c Capital expenditure and financial investment (3.7) (22.0)
5d Acquisitions and disposals (33.4) (38.0)
Equity dividends paid (33.3) (24.1)
-------------------------------------- -------- -------
Net cash (outflow)/inflow before use of liquid resources (7.1) 20.3
and financing
5e Management of liquid resources 28.2 8.7
5f Financing (25.5) (23.9)
-------------------------------------- -------- -------
(Decrease)/increase in cash in the period (4.4) 5.1
-------------------------------------- -------- -------
Reconciliation of net cash flow to movement in net
funds
(Decrease)/increase in cash in the period (4.4) 5.1
Cash inflow from decrease in liquid resources (28.2) (8.7)
Cash (outflow)/inflow from (decrease)/increase in (11.4) 30.3
funds -------- -------
--------------------------------------
(Decrease)/increase in funds resulting from cash flows (44.0) 26.7
Loans and finance leases acquired with subsidiary - (12.8)
Translation difference 2.2 -
-------------------------------------- -------- -------
Movement in net funds in the period (41.8) 13.9
Net funds at start of period 50.0 36.1
-------------------------------------- -------- -------
Net funds at end of period 8.2 50.0
-------------------------------------- -------- -------
Analysis of net funds
Cash 24.2 31.8
Liquid resources 27.2 55.4
Overdrafts (0.5) (4.8)
Other debt due within one year - (7.6)
Other debt due after one year (42.7) (24.8)
-------------------------------------- -------- -------
Net funds at end of period 8.2 50.0
-------------------------------------- -------- -------
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 29 MARCH 2003
2003 2002
£m £m
Profit for the financial year: Group (14.8) 66.7
Associates 6.9 10.5
------------------------------------------- -------- --------
(7.9) 77.2
Currency translation differences on foreign currency net 0.5 (0.2)
investments
---------------------------------------- -------- --------
Total recognised (losses)/gains for the year (7.4) 77.0
Prior year adjustment - 43.9
-------- --------
Total (losses)/gains recognised since last annual report (7.4) 120.9
---------------------------------------- -------- --------
There is no material difference between the reported profit shown in the
consolidated profit and loss account and the profit for the relevant periods
restated on an historical cost basis.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 29 MARCH 2003
2003 2002
£m £m
(Loss)/profit for the financial year (7.9) 77.2
Dividends (24.6) (25.5)
---------------------------------------- -------- --------
(32.5) 51.7
Share capital issued 1.1 8.8
Transfer to share premium - (2.4)
Shares repurchased (38.0) -
Currency translation differences on foreign currency net 0.5 (0.2)
investments -------- --------
----------------------------------------
Net (decrease)/increase in shareholders' funds (68.9) 57.9
Opening shareholders' funds 312.8 254.9
---------------------------------------- -------- --------
Closing shareholders' funds 243.9 312.8
---------------------------------------- -------- --------
1 SEGMENTAL ANALYSIS 2003 2003 2003 2002 2002 2002
Turnover Profit Net Turnover Profit Net
Before tax Assets Before tax Assets
Class of business £m £m £m £m £m £m
Continuing
operations
Cash Systems 292.8 8.4 72.1 370.5 36.0 107.5
Reorganisation (10.3) (3.8)
-------- ------- ------- -------- ------- ------
292.8 (1.9) 72.1 370.5 32.2 107.5
Acquisitions 18.1 3.2 15.0
Reorganisation (0.2)
-------- ------- ------- -------- -------- ------
18.1 3.0 15.0 - - -
-------- ------- ------- -------- -------- ------
310.9 1.1 87.1 370.5 32.2 107.5
Security Paper & 211.0 30.5 83.6 226.8 41.1 93.2
Print
Reorganisation (18.6) (7.3)
Loss on impairment (1.3)
of investment
Acquisitions 2.8 (0.1) 1.4
-------- ------- ------- -------- -------- ------
213.8 10.5 85.0 226.8 33.8 93.2
-------- ------- ------- -------- -------- ------
Global Services 34.7 (1.4) 17.5 48.1 0.5 21.0
Acquisitions 25.2 (2.6) 10.1
Reorganisation - (2.8)
-------- ------- ------- -------- -------- ------
59.9 (6.8) 27.6 48.1 0.5 21.0
Less inter-segment (1.9) - (3.7)
sales -------- ------- ------- -------- -------- ------
582.7 4.8 199.7 641.7 66.5 221.7
Discontinued
operations
Global Services - - - 9.5 (1.4)
-------- ------- ------- -------- -------- ------
- - - 9.5 (1.4) -
Goodwill
amortisation
Cash Systems - (19.3) (2.2)
Security Paper & - 0.2 -
Print
Global Services - (0.5) (0.6)
-------- ------- ------- -------- -------- ------
- (19.6) - - (2.8) -
-------- ------- ------- -------- -------- ------
582.7 (14.8) 199.7 651.2 62.3 221.7
-------- ------- ------- -------- -------- ------
Associated companies 9.2 13.5 11.8 17.6
(analysed below)
Non-operating items - 24.2
(note 4)
Net Interest 0.9 2.6
including
associates
------- --------
Profit before (4.7) 100.9
taxation ------- --------
Unallocated net 26.7 26.6
assets/(liabilities) ------- ------
Capital employed 239.9 265.9
Net funds 8.2 50.0
------- ------
Net assets 248.1 315.9
------------------- -------- ------- ------- -------- -------- ------
Geographical area by
operation
United Kingdom and 320.0 (17.2) 80.9 350.5 14.7 92.0
Ireland
Rest of Europe 216.5 14.5 67.0 251.5 41.9 60.2
The Americas 136.2 (15.6) 40.7 134.5 6.9 49.0
Rest of world 42.8 3.5 11.1 52.6 (1.2) 20.5
Less inter-area (132.8) - (137.9) -
sales -------- ------- ------- -------- -------- -------
582.7 (14.8) 199.7 651.2 62.3 221.7
----------------------- -------- ------- ------- -------- -------- -------
The profit before tax in 2003 is shown after reorganisation costs of £31.9m
(2002 : £11.1m) comprising UK and Ireland £22.8m (2002 : £2.7m), Rest of Europe
£5.2m (2002 : £0.2m), Americas £3.9m (2002 : £0.9m), Rest of World £Nil (2002 :
£7.3m).
Inter-area sales of £132.8m (2002 : £137.9m)comprise: UK & Ireland £51.4m (2002
: £62.4m), Rest of Europe £53.3m (2002 : £37.0m), Americas £6.0m (2002 : £9.9m),
Rest of World £22.1m (2002 : £28.6m)
------------------- -------- ------- ------- -------- ------- ------
Geographical area by
destination
United Kingdom and 68.8 79.1
Ireland
Rest of Europe 174.7 277.9
The Americas 173.0 162.6
Rest of world 166.2 131.6
-------- --------
582.7 651.2
------------------- -------- ------- ------- -------- ------- ------
Associated companies are analysed
as follows
Security paper and - 0.2 0.1 1.6
print
Cash Systems 0.6 - - -
UK lottery 8.6 13.3 11.7 16.0
------- ------- ------- ------
9.2 13.5 11.8 17.6
------- ------- ------- ------
Geographical area by
operation
United Kingdom and 8.6 13.3 11.7 15.9
Ireland
Rest of Europe 0.6 - 0.1 1.4
The Americas - - - -
Rest of world - 0.2 - 0.3
------- ------- ------- ------
9.2 13.5 11.8 17.6
------------------- -------- ------- ------- -------- ------- ------
The Group's cash and borrowings are managed centrally and therefore interest is
not attributable to individual classes of business or geographical segments.
Unallocated net assets and liabilities, which consist of assets and liabilities
relating to non-divisional operations, are controlled centrally and cannot be
allocated meaningfully to individual classes of business or geographical
segments.
2 OPERATING COSTS EXCLUDING AMORTISATION OF 2003 2002
GOODWILL
£m £m
Cost of sales
Continuing operations 357.7 423.4
Reorganisation costs 28.9 11.1
---------- ----------
386.6 434.5
---------- ----------
Acquisitons 29.7
Reorganisation costs 3.0
---------- ----------
32.7 -
Discontinued operations - 7.7
---------- ----------
419.3 442.2
Distribution costs
Continuing operations 20.1 22.9
Acquisitions 0.1
---------- ----------
20.2 22.9
Administration and other expenses
Continuing operations 121.3 117.9
Loss on impairment of investments 1.3
Acquisitions 15.8
---------- ----------
138.4 117.9
Discontinued operations - 3.1
---------- ----------
138.4 121.0
----------------------------------- ---------- ----------
577.9 586.1
----------------------------------- ---------- ----------
---- ----------------------------------- ---------- ----------
3 TAXATION 2003 2002
£m £m
Tax on profit on ordinary activities
United Kingdom
Current tax
Corporation tax at 30% (2002 : 30%) 6.6 2.2
Adjustments in respect of prior years (0.8) (7.8)
---------- ----------
5.8 (5.6)
Double taxation relief (0.7) -
---------- ----------
5.1 (5.6)
---------- ----------
Overseas tax 6.5 7.0
Adjustments in respect of prior years (0.6) 1.0
---------- ----------
5.9 8.0
---------- ----------
Tax on share of associates 1.9 4.7
---------- ----------
12.9 7.1
---------- ----------
Deferred tax
Origination and reversal of timing difference (0.4) 13.3
Adjustments in respect of prior years (0.8) 4.2
Tax on share of associates 0.8 (0.4)
---------- ----------
(0.4) 17.1
---------- ----------
Total tax charge excluding exceptionals 12.5 24.2
---------- ----------
Exceptional items (10.0) (2.0)
---------- ----------
Total tax charge after exceptionals 2.5 22.2
---------- ----------
The effective rate remains below the UK nominal rate of 30%. A summary
reconciliation is shown below.
2003 2002
£m £m
Profit before tax on ordinary activities before 44.5 87.8
exceptional items
----------------------------------- ---------- ----------
Expected tax charge at 30% 13.3 26.3
Rate adjustments relating to overseas profits (2.8) (1.9)
Overseas dividends 0.2 1.5
Disallowables & other items 3.6 (12.0)
Adjustments in respect of prior years (1.4) (6.8)
----------------------------------- ---------- ----------
Current tax charge (excluding exceptional items) 12.9 7.1
----------------------------------- ---------- ----------
PRINCIPAL EXCHANGE RATES
2003 2003 2002 2002
Average Year end Average Year end
US Dollar 1.54 1.57 1.43 1.42
Euro 1.56 1.46 1.62 1.63
Swiss Frank 2.28 2.15 2.43 2.39
4 EARNINGS PER SHARE 2003 2002
-------------------------------------- ------ --------
Basic (4.3)p 40.7p
Fully diluted (4.3)p 40.0p
-------------------------------------- ------ --------
Earnings per share are based on the loss for the year attributable to ordinary
shareholders of £7.9m (2002 : profit of £77.2m) as shown in the Group profit and
loss account. The weighted average number of ordinary shares used in the
calculations is 183,656,364 (2002 : 189,886,749) for basic earnings per share
and 184,714,858 (2002 : 193,267,705) for diluted earnings per share after
adjusting for dilutive share options.
-------------------------------------- -------- --------
pence pence
per per
Reconciliation of earnings per share share share
-------------------------------------- -------- --------
As calculated under FRS 14 (4.3) 40.7
Profit on the disposal of discontinued operations - (0.7)
Profit on sale of investments - (12.0)
Loss on impairment of investments 0.7 -
Loss/(profit) on the disposal of fixed assets and assets 0.2 (0.1)
held for resale
Amortisation of goodwill 10.4 1.5
-------------------------------------- -------- --------
Headline earnings per share as defined by the IIMR 7.0 29.4
Reorganisation costs 11.9 5.0
-------------------------------------- -------- --------
Headline earnings per share before items shown above 18.9 34.4
-------------------------------------- -------- --------
The Institute of Investment Management and Research (IIMR) has published
Statement of Investment Practice No. 1 entitled 'The Definition of Headline
Earnings'. The headline earnings per share shown above have been calculated
according to the definition set out in the IIMR's statement. The reconciling
items between earnings per share as calculated according to FRS 14 and as
calculated according to the definition of the IIMR's headline earnings include
the underlying tax effects.
The directors are of the opinion that the publication of the IIMR's headline
earnings figure is useful to readers of interim statements and annual accounts.
5 NOTES TO GROUP CASH FLOW STATEMENT 2003 2002
£m £m
a Reconciliation of operating (loss)/ profit to net cash inflow from
operating activities
Operating (loss)/profit (14.8) 62.3
Depreciation and amortisation 49.4 29.1
Decrease/(increase) in stocks 8.6 (8.4)
Decrease/(increase) in debtors 15.9 (6.5)
(Decrease)/increase in creditors (9.8) 7.8
Increase in reorganisation provisions 7.4 3.4
Other items 2.4 0.6
---------------------------------------- ------ ------
Net cash inflow from operating activities 59.1 88.3
---------------------------------------- ------ ------
b Returns on investments and servicing of finance
Interest received 4.2 3.4
Interest paid (3.8) (3.5)
Dividends paid to minority shareholders (1.5) (0.9)
---------------------------------------- ------ ------
Net cash outflow from returns on investments and (1.1) (1.0)
servicing of finance
---------------------------------------- ------ -------
c Capital expenditure and financial investment
Purchase of tangible fixed assets (20.7) (21.6)
Purchase of intangible fixed assets (0.6) (0.4)
Sale of tangible fixed assets 1.7 1.6
Sale of investments 15.9 13.3
Purchase of own shares - (14.9)
---------------------------------------- ------ -------
Net cash outflow for capital expenditure and (3.7) (22.0)
financial investment
---------------------------------------- ------ -------
d Acquisitions and disposals
Purchase of subsidiary undertakings (33.6) (44.8)
Net cash acquired with subsidiary undertakings 0.2 0.7
Sale of subsidiary undertakings - 2.8
Net cash sold with subsidiary undertakings - (0.8)
Sale of assets held for disposal - 4.1
---------------------------------------- ------ ------
Net cash outflow from acquisitions and disposals (33.4) (38.0)
---------------------------------------- ------ ------
e Management of liquid resources
Net decrease in short term deposits 28.2 8.7
---------------------------------------- ------ ------
f Financing
Debt due within one year:
Loans repaid (7.0) (16.9)
Debt due beyond one year:
Loans raised 24.1 24.6
Loans repaid (5.0) (37.4)
Capital element of finance lease rental (0.7) (0.6)
repayments
Share repurchase (38.0) -
Share capital issued 1.1 6.4
---------------------------------------- ------ ------
Net cash outflow from financing (25.5) (23.9)
---------------------------------------- ------ ------
NOTES
6 The consolidated accounts have been prepared as at 29 March
2003. The comparatives for the 2002 financial year are for the year ended 30
March 2002.
7 This statement has been prepared in accordance with the
guidelines published by the Accounting Standards Board.
8 The Institute of Investment Management and Research (IIMR)
has published Statement of Investment Practice No. 1 entitled 'The Definition of
Headline Earnings'. The headline earnings per ordinary share shown in this
preliminary statement have been calculated according to the definition set out
in the IIMR's statement. Also shown are the reconciling items between earnings
per share as calculated according to FRS 14 and as calculated according to the
definition of the IIMR's headline earnings.
9 The financial information set out above (Group Profit and
Loss Account, Group Balance Sheet, Group Cash Flow Statement, Group Statement of
Total Recognised Gains and Losses and Notes thereto) and extracts from the
Financial Review do not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 29 March 2003 will be posted to
shareholders on 13 June 2003 for subsequent approval at the Annual General
Meeting and copies will be available from the Company Secretary at De La Rue
plc, De La Rue House, Jays Close, Viables, Hampshire, RG22 4BS. The report of
the auditors on these accounts is unqualified and does not contain a statement
under either section 237(2) or 237(3) of the Companies Act 1985. Statutory
accounts for the year ended 30 March 2002 have been delivered to the Registrar
of Companies.
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